Passing a parameter does not seem to work - xslt-1.0

Question

I need a parameter to be send to a template to help with processing the right nodes in an external second xml file (this to keep the amount of templates small).
I've found that the following code send the parameter and processes it correctly:
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
<xsl:output method="html" indent="yes"/>
<xsl:template match="/">
This is text1
<xsl:apply-templates mode="my-mode">
<xsl:with-param name="testParam" select="'TEST_PARAMETER'"/>
</xsl:apply-templates>
This is text2
</xsl:template>
<xsl:template match="DialStats" mode="my-mode">
<xsl:param name="testParam" />
<br></br>
This is text 3<br></br>
<xsl:value-of select="$testParam" /><br></br>
This is text 4<br></br>
</xsl:template>
</xsl:stylesheet>
When I implement the second file I've found that the following no longer passes the parameter:
<xsl:stylesheet version="1.0" xmlns:xsl="http://www.w3.org/1999/XSL/Transform">
<xsl:output method="html" indent="yes"/>
<xsl:template match="/">
This is text1
<xsl:apply-templates select="document('file://D:/DATA/Marquee/DATA/MarqueeStats.xml')" mode="my-mode">
<xsl:with-param name="testParam" select="'TEST_PARAMETER'"/>
</xsl:apply-templates>
This is text2
</xsl:template>
<xsl:template match="DialStats" mode="my-mode">
<xsl:param name="testParam" />
<br></br>
This is text 3<br></br>
<xsl:value-of select="$testParam" /><br></br>
This is text 4<br></br>
</xsl:template>
It calls the template correctly, as I can see both the lines with 'This is text x". So the parameter is gone. I did find some articles suggesting the match= needs to be set, so I matched that with the xml root:
<DialStats>
<Countries Country="Denmark">
<Products Product="MR">
. . .
Any suggestions on how to resolve this?
BTW this is just the basics I need to get right as a lot more code need to be added.